Written by Rabia Ansari 11:46 am International Relations, Published Content, Research Papers

Neo-colonialism & Economic Imperialism: The Third World’s Enslavement

Though traditional colonization has officially ended, decolonization of the Third World has been incomplete. Rabia Ansari argues that in light of the new forms of colonialism seen in the world, decolonization cannot be limited to states becoming independent and the removal of foreign forces. In contemporary times, neo-colonialism or economic imperialism has taken root in the Third World, indebting weak states to former colonial powers.
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Rabia Ansari is studying politics and history at the University of Durham. She is currently in her third year and loves writing about contemporary issues whilst on her break.


In the aftermath of World War II, the world saw many countries gain their independence from their colonizers. European empires controlled a huge portion of the Earth’s territory and, as a result, a large percentage of the world’s population. The Second World War brought an end to many European empires ruling over a third of the world’s population. This resulted in many countries gaining independence including India (1947), Vietnam (1954), Egypt (1956), and Ghana (1957).

The world had changed radically by the end of the twentieth century, with nearly 200 independent states joining the United Nations (Bismark, 2012). By its traditionalist definition, “decolonization” refers to the removal of foreign presence resulting in the independence of the colony/state. According to this definition, decolonization is complete as nation-states have raised their flags and joined the United Nations as equal members, however, even though this definition was useful at first, it has proved to be quite narrow as it ignores economic, social, and cultural implications of decolonization (Bismark, 2020).

In this paper, I will argue against “decolonization is complete” because even though the traditional definition points toward decolonization being complete, this is not the case. New forms such as neo-colonialism/economic imperialism have come to the front, which dominate Third World countries/developing nations and prevent them from making their own political decisions.

Development & the Third World

The world map drastically changed during the period of decolonization, with a hundred countries coming into existence from 1945 to 1989. Many scholars say that decolonization is complete and that each country will have to go through what is called Walter Rostow’s stages of development (modernization theory). Rostow says that a nation will go through five stages before reaching its full potential: traditional society, transitional stage, take off, drive to maturity, and lastly high mass consumption. (Rostow, 1960).

According to this theory, countries should aim to model themselves after the West and aspire to be a modern state of capitalism. Most developed countries, such as the United States, have already reached the last stage in his theory. An example to support this theory can be Singapore, which became independent in 1965. At first, it did not seem to have any prospects for growth, however, it industrialized early, developing high-tech industries and making profits. It is now one of the most sought-after trade markets, with a higher income per capita than many other European countries (Jacobs, 2020).

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Today, we see the growth of countries in the Global South such as China, India, Brazil, and South Africa. Some of these countries have indulged in “imperial” practices themselves (Baylis et al., 2021). China, Japan, India, and Brazil are among the ten largest economies in the world, according to the latest World Bank figures, while South Korea is ranked eleventh. Meanwhile, China’s GDP exceeds that of Germany, the United Kingdom, France, and Italy put together.

Between 1953 and 2010, “emerging” countries’ share of industrial production climbed from 5% to 32.1 percent. Thus, it can be argued that decolonization is complete and that many nation states which were previously colonized are doing well for themselves. However, such examples are not always the case, and in many situations, economic imperialism – or most popularly known as “neo-colonialism” – has taken over.

Neo-colonialism or Economic Imperialism

The term “neo-colonialism” was first coined by Kwame Nkrumah, the first leader of independent Ghana and an anti-colonial activist. He talked about how a state might be independent in theory and might have all the outward trappings of international sovereignty, however, its economic system and political policy are directed from the outside (Baylis et al., 2021). Nkrumah says that despite independence, if foreign military troops had stayed in a country, or investors or corporations had invested in it, its policies would usually be dictated by other external forces typically the former colonizers or superpowers such as the United States (Baylis et al., 2021).

Even though many argue that conventional forms of colonialization such as the physical presence of the colonizers are of the past, it is still impossible to ignore neo-colonialism and its repercussions. Neo-colonialism or economic imperialism has created a dependency on First World countries in the post-colonial world. This leads to Third World countries having to adhere to Western demands and usually translates to superpowers making demands related to military and negotiating power, leaving the nation-state with no say in its politics.

Dependency Theory & Neo-colonialism

I will further my argument by using dependency theory – a school of thought in the field of international relations, helping us understand underdevelopment in Third World countries and the reasons behind it. The notion of the dependency theory states that resources go from the “periphery” of poor/underdeveloped nations to the “core” of wealthy states, at the expense of the former. A key theme in this theory is that one of the main reasons why underdeveloped nations are poverty-stricken is due to how they are integrated into the “world system” (Ahiakpor, 1985).

This theory claims that the dominance of a few currencies in the international exchange system, that are issued and regulated by developed countries, is harmful to poor countries’ economic well-being. The harmful effects are assessed in terms of high “world” interest and inflation rates, as well as their influence on less developed countries’ capacity to borrow funds for development.

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World financial institutions such as the International Monetary Fund (IMF) and the World Bank provide either unsatisfactory or no relief from credit constraints because they are controlled by developed countries (particularly the United States). These countries are not genuinely interested in assisting less developing countries in becoming stable as it would hurt their dominance (Ahiakpor, 1985).

Dominating the South

An example of colonial trade structures could be the fact that 70-90% of trade in the economies of Latin America, the Middle East, and Africa takes place with business partners outside their respective regions. Whereas, In North America and Western Europe, it is less than half. Governments and corporations in the North use the IMF, World Bank, and WTO to oppress the South.

It’s worth remembering that voting rights on the IMF and World Bank executive boards are weighted according to capital shares: rich countries who pay a lot have more voting rights. As a result, the executive directors from Germany, France, and the United Kingdom have more than twice as many votes (11.96 percent) in the IBRD as the representatives from the nearly 50 African countries put together. Unlike the World Bank and the IMF, the WTO’s decision-making systems are structured around the UN principle of “one country, one vote.” Decisions are made by consensus,

However, an examination of the WTO negotiations at Doha revealed that powerful industrialized countries, particularly the United States and the European Union, were able to enforce their visions of a world trade system in many cases. They were able to do so by utilizing their superior negotiating capabilities, informal exploratory conversations, deft tactics, pressure, and even threats directed at specific countries (or country representatives). This further adds to our argument that decolonization is not complete, in fact, neo-colonialism heavily dominates most of the South today.

Another example that can be directly linked to dependency theory is when in 1997, South Korea was hit by the Asian financial crisis, and the United States came up with a “rescue package” of $57 billion bound to economic policy conditions. These IMF conditions enabled North American and European companies to acquire large shares in South Korean companies such as Hyundai, Daewoo, and Samsung for the first time.

The 6 largest Korean banks were auctioned off to foreign investors, where Korean participation was not allowed. This can be a clear example of neo-colonialism and dependency in the globalized economy. Even the former chief economist of the World Bank, Joseph Stiglitz had said that the IMF “represented the interests and ideologies of the western financial world” in the Asian Crisis. (Stiglitz, 2017).

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Sovereign Basing

In continuation of my argument, I will present the concept of “sovereign basing” which refers to establishing a military base in another country. The United States has successfully developed and upheld a military network with the ability to project force and aggression anywhere in the globe using its military bases. As America is a hegemonic power, it has often indulged in funneling wealth from “independent” states through unethical trade practices rather than direct colonial control.

The invasions of Iraq and Afghanistan do show that the concept of colonialism is very much in the present rather than the past. Militarism and imperialism go hand in hand with the United States having 750 military bases in eighty different nations (Bandow, 2021). This has given it an unfair advantage of accessing the political culture of the country, where the base is present and being able to influence it adding to its imperialistic nature.

With the presence of many bases around the world, alongside the bullying nature of the United States, how can one say that decolonization is complete? Traditional colonization might have ended, nonetheless, new forms of colonization are still obviously prevalent today.


Using neo-colonialism and the dependency theory as examples to convey my argument, I have argued that decolonization is not complete despite living in a world with nation-states. Decolonization does not only mean the removal of the colonial presence but in fact, has a deeper meaning. After World War II, colonialism was effectively abolished, but dependency remained. Rather, neo-colonialism or economic imperialism took hold, using capitalism and money to oppress underdeveloped countries.

Many developing countries got so indebted to wealthy nations that they had no real possibility of repaying their debts and progressing. There is too much evidence of economic imperialism to believe that decolonization is complete, it has just taken a new form under neo-colonialism or economic imperialism.


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